Modi Budget Plans Funds for Grid, Solar to End Blackouts

Prime Minister Narendra Modi’s
government plans to spend 15 billion rupees ($250 million) on
programs to boost solar power and reform electricity supply to
farmers to end blackouts in India.

“Power is a vital input for economic growth,” Finance
Minister Arun Jaitley said today in his budget speech. “The
government is committed to providing 24/7 uninterrupted power
supply to all homes.”

More than 300 million people in India lack access to
electricity, equivalent to the total U.S. population. The
previous government missed a 2012 target to provide electricity
to all households.

The proposed budget, which needs to be passed by parliament
by July 31, earmarked 5 billion rupees to roll out a program
implemented by Modi in his home state of Gujarat, where power
feeder lines to farmers were separated from those to other
consumers. That enabled Gujarat to ensure uninterrupted
electricity to most areas by reducing theft and limiting the
volume provided below-cost to farms.

While the proposals will improve the quality and
availability of power, the resources required to split off rural
electricity supply “are far larger than budgeted,” said
Kameswara Rao, head of energy, utilities and mining in India for
PricewaterhouseCoopers LLP.

“This initial allocation should be used to attract
domestic and multilateral funds,” to supplement the program, he
said.

Sun Power

The budget set aside 10 billion rupees on projects to boost
the use of sun power. Five billion rupees would be spent on
building so-called ultra-modern solar power plants in Rajasthan,
Tamil Nadu and Jammu and Kashmir states. Another 4 billion
rupees would go toward installing 100,000 photovoltaic-powered
farm irrigation pumps, and an additional 1 billion rupees to lay
solar panels on the banks of canals.

A tax on coal producers used to fund clean-energy programs
would also be doubled to 100 rupees a metric ton, according to
the budget. The tax, introduced in the 2010 budget, collected
about 25 billion rupees in its first year.

Jaitley also announced plans to cut or eliminate duties
faced by solar manufacturers, wind-turbine makers and builders
of biogas plants.